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Credit Repair & Financial Advice Blog


Minimum Credit Score Needed to Purchase a Car

If you are planning on purchasing a new vehicle and don’t have the cash or trade-in to cover the full amount needed for the purchase, then a car loan is needed. Getting approved for a car loan, however, can depend on a few variables, such as:

  • Employment verification
  • Income – How much and how dependable that income is
  • Credit payment history
  • Assets and net worth
  • Credit score and more

Out of those facets, your credit score can have a huge impact on whether or not you are approved for a car loan and how low your interest rate will be. Having a good credit score will not only ensure that you are approved but will lower the interest rate considerably which, in turn, decreased your payment significantly.

As far as a minimum credit score needed to be approved, that can vary depending on the lender. Some lenders are willing to take the risk of approving a loan to someone with poor credit because they are able to mitigate some of that risk by hiking up the interest rates. According to, car loans made to borrowers with poor credit tend to pay 3 to 4 times as much as someone with good credit. Poor credit is usually identified by having a credit score between 501 and 600 while a “bad” credit score is considered less than 500.

Check Your Score Before You Apply

The general rule of thumb when applying for a car loan with a low credit score is that you will need a score above 500 to even get approved. Lower than that and it is highly unlike that you will get approved and, instead, you will only be damaging your credit further by applying. Each time a potential lender run your credit, you could be decreasing your score.

That being said, if your credit score is below 500 but you recently went through bankruptcy and no longer have any debt, it is not unlikely that lenders will line up to give you a car loan even with poor or bad credit. That is because it isn’t as risky for them to lend to you since they know you no longer have any other debt to worry about. But, again, you will likely have to deal with a very high interest rate and high payments.

The best route to take would be to work on increasing your credit score as much as you can prior to applying for a car loan. That way you can be sure that your application will get approved, your interest rate will be lower and your car payments will be much easier to make.

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